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Why Loyalty Programs Are Key to Building Brand Devotion

Posted by Drew Melendy on Mar 16, 2020 5:24:23 PM
Drew Melendy

Loyalty programs are not a new concept in retail. Many can recall the days of using punch cards and stamps to cash in on free goods and discounts. 

Today, these programs look very different. Customers prefer using digital channels to collect and redeem their points, discounts, and credits. However, the value proposition still remains: Customers are given opportunities to earn rewards in exchange for repeat business.

Simple as it may sound, loyalty programs can transcend their practical purpose. They can help brands provide stellar customer experiences, forge strong customer relationships, and inspire long-lasting brand loyalty. Here’s how you, too, can use them to your advantage.

Woman looking through her phone has her attention captured at the mention of rewards program for frequent shoppers.

Use Loyalty Rewards As A Key Brand Differentiator

The digital age has given consumers more choice than they could ever dream of. At any given time, they can find what they’re looking for with great precision at a low price. Plus, there's no shortage of retailers that offer first-class customer service. 

Given this grim situation, merchants may wonder if customer loyalty even exists. However, therein lies the problem! Retailers must stop blaming Amazon, or worse still, their customers. Instead, they should focus on their customer experience.

A Walker study found that customer experience is overtaking price and product as the key brand differentiator. Simply put, discerning shoppers and competing prices are not what’s stopping you from flourishing amongst the competition.

If you want your business to truly stand out, reward your customers for shopping with you. With 75% of customers stating that they favor companies that offer rewards, loyalty programs are clearly working to set businesses apart from their competition.


Motivate Increased Spending & Repeat Business

Purchasing decisions stem from emotion, not reason. Even if they sneak in ever so subtly, emotions are the main drivers behind our shopping habits. Every time you reward someone for engaging with your brand, your business gets a little more emotional buy-in from them. 

A loyalty program that incorporates cashback store credits gives consumers a goal to reach. After so many purchases, they’ll unlock a minimum dollar threshold that they can use towards their future purchase.

This game-like experience is part of what makes the shopping experience memorable, fun, and exciting. This experience, known as retail gamification, is a powerful motivator for continued engagement and growing average order value

Pair automated emails with gamification to deliver messages that inspire future spending sprees. For instance, a congratulatory email for earning loyalty points will keep your shopping experience top of mind and maintain a continuous cycle of engagement.

Related Reading: 5 Types of Emails That Strengthen Customer Loyalty

Woman thinks about making another purchase to her favorite online boutique this week.

Improve Your Customer Retention Strategy

If you’ve been in business long enough, you’ve likely heard of the 20/80 principle. 20% of your customers make up 80% of your revenue. What’s more, it will cost you five times more to attract new customers than to retain these existing ones!

Your every effort should be rooted in serving them and going the extra mile to convert passive buyers into loyal customers. That’s why it’s more important than ever to invest in your customer relationships.

Loyalty programs bring your customer relationships to the next level. It goes beyond excellent service and thank you emails; it’s a way to recognize and give back to your faithful patrons.

Brands that invest in developing customer loyalty ultimately ensure that their customers continue shopping with them long down the road. By offering rewards, you’re securing their business and their connection with you. This leads us to our next point.

Related Reading: How to Turn Your Social Following Into Raving Brand Fanatics

Two friends excitedly share their phone screens to introduce their favorite brands through word-of-mouth marketing.

Create Brand Evangelists

Customers don’t become advocates overnight. Many times, it takes up to 5 purchases to develop loyalty toward a brand. In this way, reward programs are excellent incentives for pushing customers up the loyalty ladder. 

Regular customers turn to brand advocates. Happy customers are eager to tell others about their experience with your business.  In fact, over 70% of consumers are more likely to recommend a brand if it has a good loyalty program. 

The Takeaway

Loyalty programs go beyond the allure of discounts. They provide added value, respect, and appreciation towards customers, making your brand that much more magnetic. The more you serve your customers, the more they will give back to you in both loyalty, revenue, and advocacy.

Topics: Marketing, Business Strategy, Gamification

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